A few thoughts from the surprisingly-low GDP figure of 1.2% growth for the 2nd quarter of 2016.
This graph from Econbrowser gives a good breakdown of how we ended up at that figure. As you'll see, consumer spending actually was quite strong between March and June, adding over 2.8% to GDP last quarter. But inventories shrank by a lot (the pink line), and the rest of the economy also stagnated.
What's also concerning with this release is that after 6 straight quarters of 2% growth or more, we now have had 3 consecutive quarters of lower growth, as Q4 2015 was 0.9% and Q1 2016 was 0.8%. This cuts the year-over-year growth rate to just over 1.2%, which is the lowest in 3 years, and is less than half of where we were at the start of 2015.
Also interesting to note is that government spending declined for the first time since the end of 2014. The government sector had actually boosted GDP in the previous 5 quarters after having a significant decline between 2010 and 2014, and if the economy is truly slowing, you wonder how that'll be reflected with the availability and use of government expenses.
But in all, the economy is still growing, albeit at a slower pace (as you will see by the growth rate leveling off at the end). This means the Obama Recovery is still continuing in the Summer of 2016, now at 7 years and counting.
But 7 years is quite a while to go without recessions, and with U.S. unemployment now below 5%, unemployment claims at the lowest levels since the 1970s, and a strong dollar holding down exports, I have to wonder how long these good times are going to last. It almost seems like we either are heading toward a late-game Bubble in housing and/or stocks (the frequent Rocket Mortgage and "pre-approved" ads should give chills to anyone who remembers what happened in the 2000s), or that the slowdown might turn into something that starts to lead to job losses in areas other than oil drilling and manufacturing.
Don't get me wrong, we're a helluva lot better than we were when Obama took office in January 2009, and that should never be forgotten. But I do think it is appropriate to wonder where things go from here.